Google Has High Hopes for Display, Mobile Advertising in '10

CEO Schmidt: Search Giant Wishes to Remain in China 'Under Different Terms'

By Published on .

NEW YORK ( -- Google turned in a strong fourth quarter with revenue up 17%, but CEO Eric Schmidt said 2010 would be the year when display and mobile advertising would become drivers for the search giant.

Eric Schmidt
Eric Schmidt Credit: AP
"Our display business will give advertisers the opportunity to reach people with visual stories and narratives that they couldn't with search-ad text," Mr. Schmidt said on a call with analysts.

$1.97B in earnings
Google's results reflected search advertising's resilience in a weak economy, with revenue up to $6.67 million from $5.7 million a year ago. Paid clicks were up 13% from the prior year, and earnings were $1.97 billion compared to $382 million in the fourth quarter of 2008.

Though earnings beat analyst expectations, Google shares fell 4.8% in after-hours trading, indicating the market had expected more of a blowout than the strong quarter it got.

But as search advertising again proved itself to be robust, Google executives focused on convincing Wall Street and Madison Avenue that it could find growth elsewhere, namely from display and mobile advertising as marketers shift budgets online.

"We have said that the next huge business for us is display," Mr. Schmidt said. "One of the stories that has yet to come out is how successful Google has been at display."

YouTubes home page
He cited the sell-out of YouTube's home page in the fourth quarter -- specifically, Fox's campaign for "Avatar" -- as evidence that marketers are taking Google seriously as a display medium. Google's product chief, Jonathan Rosenberg, said YouTube is "monetizing well," and at least one analyst has predicted it will turn profitable in 2010.

Nikesh Arora, president of global sales, said display advertising had moved from being "nice" to an "essential part of any campaign our advertisers are planning."

While mobile is still nascent, Mr. Schmidt said he expected it to be a material contributor in 2010, provided the proposed acquisition of mobile-advertising network Admob is approved by regulators.

Google recently became a retailer with the introduction of its Nexus One mobile phone, one of an increasing number of ways it finds itself in competition with Apple, a former close ally. Mr. Schmidt said he expects Google and Apple to continue to compete and cooperate and that the relationship is "stable."

He declined to say whether he thought Google would be able to renew the deal that makes Google the default search engine on the iPhone. A recent Business Week report said that deal has been under renegotiation for weeks and that Apple may make a switch to Microsoft's Bing if talks fall through.

As for China...
Little was said on the earnings call about the biggest recent development at Google, its decision to draw a line in the sand and say it will withdraw from China unless it can offer uncensored search results on its search engine.

Mr. Schmidt said talks with the Chinese government are proceeding.

"We wish to remain in China," he said. "We like our Chinese employees. We like the business opportunities in China. But we would like to remain there under different terms."

Most Popular
In this article: